BLACK SEA BASIN REGIONAL PROFILE:

I INTRODUCTION

II PROFILE BACKGROUND OF THE BLACK SEA BASIN

1. Geopolitical and Geostrategic Tendencies
2. Sources of Conflict: The Oil and Gas Issue

III CONFLICTS AND POST-CONFLICT DEVELOPMENTS IN THE BLACK SEA AREA

1. Chechnya
2. The Nagorno Karabakh Conflict
3. The Abkhasisn Conflict
4. The Transdniestr Conflict
5. Ecological Disaster in the Caspian Sea

 

IV THE NATIONAL PERSPECTIVES: SPECIFIC DEVELOPMENTS

1. Armenia
2. Georgia
3. Moldova
4. Russia
5. Ukraine

V THE BILATERAL RELATIONS IN THE BLACK SEA REGION

1. Bilateral Relations
2. Multilateral Relations

VI THE STATE OF REGIONAL INITIATIVES

1. The Economic Situation in Black Sea Region Countries and Its Consequences on Black Sea Cooperation
2. Political and Security Aspects of the Cooperation

VII EXTERNAL FACTORS (STATES AND INSTITUTIONS) INFLUENCING THE BLACK SEA REGION

1. USA
2. NATO
3. EU

VIII THE SECURITY SITUATION AND REGION-BUILDING OPPORTUNITIES: CONCLUSION

Introduction

A broad region stretching from the Black Sea to the Caspian Sea has been  dominated in the past three months by the developments of Caucasian issues and conflicts.  The key factor in the security situation and in regional cooperation was the shift of power in Moscow and the extensive plans to boost the Russian Federation as a political and economic player in the area.  One could call the past three months the “Putin period”:  relations in the broader Black Sea basin region were definitely tuning into Russia's determination to confirm its military victory in the rebel Chechen Republic, a subject of the federation; into initial acts towards restarting a normal, peaceful life in war-torn Chechnya, together with the demands of international organisations that Russia deal with the humanitarian issues first in the post-conflict period; into the clear signs of readiness of the West – the US, the UK, France, Germany, NATO and the EU – to find in Russia at last an effective working partner in many areas, and possibly in more areas in the future.

However, by the end of June the military situation in Chechnya remained unstable, and the Russian military command could not claim to be in full control of the territory. There still remain areas in which the separatist and terrorist fighters of Chechnya do not provide support for the federal forces.  This makes the post-war rehabilitation of Chechnya more difficult.

Many factors are not encouraging for projects aimed at bringing oil and gas resources to world markets. These factors are: the continuing instability of the Caucasian region, in combination with its strategic importance for Russia; the wavering international orientations of the three Southern Caucasian states Georgia, Armenia and Azerbaijan; and the Russian activity to provide the needed nucleus for integration activity within the Commonwealth of Independent States (CIS) as a significant factor of blocking the further expansion of extreme and militant Islamism presently targeting Chechnya and Central Asia.  The possibility of reaching compromises between the oil and gas interests of the various actors in the Caucasus is key to stability and regional cooperation – if the national players are able to set their own houses in order.   Diversification of oil and gas supplies and shorter routes to Europe through the Northern Caucasus are the likely formula for negotiating a lasting solution to the region's broader economic, political and military situation.

II   Profile Background of the Black Sea Basin

1.  Geopolitical and Geostrategic Tendencies

Russia launched a high-level diplomatic campaign to restore its influence in Central Asia and the Trans-Caucasian region.  The visits of Russian President Vladimir Putin to Uzbekistan and Turkmenistan that started on 18 May marked, in an important way, Russia’s intentions to restore its weight in these former Soviet Union territories.  The visits and the evolving relations also reflect Russia’s response to Central Asian requests for security assistance against the threat of Islamic fundamentalists (an issue that for many security experts is a matter of theory and research turned into a direct problem for Russia and its Central Asian neighbours in past years).  An exchange of threats by Russian leaders and the Taliban leaders of Afghanistan further highlight the persistence of this issue.  Kazakhstan, Kyrgystan and Tajikistan also belong to those countries that have keen interests in developing stronger security ties with Moscow, and which in turn showed decisiveness in combating Islamic terrorists and separatists in Chechnya and in Tajikistan.  The military cooperation agreement between Putin and Turkmen President Saparmurat Niyazov, and the 28 agreements with Uzbek President Islam Karimov on military aid and cooperation, are cornerstones of Russia’s return to the region.

These deals are matched with huge gas-supply agreements between Russia and Turkmenistan,  an additional supply to Russia of 10 billion cubic metres of natural gas from Turkmenistan. Niyazov became more cooperative after Russia began the construction of the Blue Stream gas pipeline in lead of the Trans-Caspian Gas Pipeline.

Additional indicators of a shifting geopolitical tendency in the broader region include expectations of a pro-Russian successor to Azerbaijan President Heidar Aliev;  the unsolved issue of Russian military bases in Georgia;  the active Russia-Kazakhstan military cooperation and the replacement of Belgium’s Tractebel by Russia’s Gasprom as principal foreign partner in operating gas pipelines;  joint Russia-Tajikistan military exercises and Russian armed forces based in Tajikistan;  and Russia's insistence on a 30-year gas-supply pact with Turkmenistan.

Russia is negotiating a long-term project to transport oil through a Chinese-Russian oil pipeline in addition to military deals already negotiated.

Russia is also reaching out to India.  After a visit of a high-ranking official from the Russian military-industrial complex in the third week of April, an earlier agreement for India to purchase 310 T-90 tanks from Rossvoorusenie was confirmed.  The tanks are expected to balance the 320 T80U tanks Pakistan has bought from the Ukraine.

Iran is developing special relations with Russia.  In addition to previously defined joint interests in the field of natural gas distribution, Iran introduced on its balance sheet a joint Iran-French consortium that would finance an oil pipeline from the Caspian Sea to Teheran.

The military balance of the broader region will be influenced by a deal Turkey is preparing with Germany.  The German Government was expected to take a decision on 3 July on selling 1'000 German Leopard tanks from the Mannesmann group.  However, Germany is worried that the tanks will be used in the war between Turkey and Kurdish separatists.

2.  Sources of Conflict:  the Oil and Gas Issue

Putin's appointment of Victor Kaliusin, a former minister of energy, as deputy minister of foreign affairs, who will act as Putin's special representative on the regulation of the status of the Caspian Sea, is a strong signal of how seriously Russia is in its intentions to deal with energy and geostrategic issues in the area.  The distribution and transportation of oil and gas in the former Soviet republics is another responsibility of the new deputy minister of foreign affairs.  The energy issue is  high on the agenda of tools for Russian foreign policy.

The exploitation of the oil pipeline that surrounds Chechnya started on 17 May.  The pipeline is part of the longer oil pipeline Baku-Novorossiysk, and its construction began a year ago, after it became clear that the transportation of oil would be blocked by conflicts. The by-pass is 280 kilometres long and will transmit five million cubic metres of crude oil a year.  Part of the reconstruction of Chechnya will comprise the rebuilding of the oil wells in the country, which could produce a million tons of oil a year.

Turkey started the construction of the land sector of the Blue Stream gas pipeline from Russia on Turkish territory at the beginning of May.  Russia's Gasprom and Italy's ENI are main investors.  The pipeline is expected to become operational mid-2001.

A recent oil source found in Kashagan on Kazakhstan’s Caspian Sea shores increases the chances that the oil pipeline from Bulgaria's  Burgas port through FYROMacedonia to the Albanian Adriatic port of Vlora will function.

Another major oil transport project, the Baku-Tbilisi-Ceyhan Caspian Basin pipeline, is getting closer to realisation.  Azerbaijan, Georgia and Turkey completed the legal framework agreement at the end of April, paving the way for the pipeline.  At the same time, while this project is making enormous progress, the Trans-Caspian Gas Pipeline (TCGP) is moving slowly, and some interested investors are quitting the project.  Part of the problem is that the Turkmen Government doubts that this project will not harm other markets of the country it may choose.  The US Government is continuing to support  the TCGP and Turkmenistan's right to sell its gas to other markets.

III   Conflicts and Post-Conflict Developments in the Black Sea Area

1.  Post-Conflict Issues in Chechnya

Though the main part of the Russian military campaign in Chechnya ended with a clear Russian victory, Chechen terrorist acts continue.  In an ambush near the capital of the republic on 31 May the deputy representative of the Russian president in Chechnya, Colonel Sergey Zverev, and deputy mayor Habuseev of Grozny  were killed.  A month before, 43 elite Russian commandos were ambushed and killed in the mountains of Chechnya.  Volgograd, Ekaterinburg and other cities in Russia have been the victims of minor terrorist acts or terrorist attempts with a Chechen connection.  A special target of Chechen terror are Muslim religious leaders of Chechnya who do not support the separatist cause. Muslim cleric Umar Idrisov was shot and killed on 16 June in Urus-Martan, in the southwest of the republic, only hours after he urged for peace in Chechnya.  At the beginning of May Chechen Muslim leader Ahmed Kadirov survived an assassination attempt.  He is also a supporter of peace and is hated by both the former president of the republic, Aslan Mashadov, and the separatist field commanders. The latter have promised US$250'000 to a successful killer.

According to the Russian military command, the separatists are preparing for a new round of major war activity and are trying to form a bigger armed force.  Afghan Taliban fighters and Pakistani supporters have been approached.  The Russian Government warned on 22 May of the possibility of pre-emptive strikes against Afghanistan for its support for the rebels.

The return of Chechen refugees was accelerated after the Russian presidential elections – more than 500 Chechens are returning each day.  However, the campaign of terror, carried out by the separatists, and the sporadic fighting across Chechnya is causing new displacements and slowing the pace of returns.

Russian federal authorities are considering how to address the deep-rooted social and economic problems that are the source of unrest in the North Caucasus region.  International organisations like the United Nations (UN) and the CE continue to urge for measures that would guarantee the respect of human rights, and the US administration has already contributed US$3.3 million to UN humanitarian efforts.  The Russian Government has allowed European monitors into Chechnya and has established a government office for the investigation of human rights violations.  Vladimir Kalamanov, a lawyer, became Putin's representative for human rights in Chechnya.  More money and more cooperation from the military are expected, if his task is to be fulfilled.  Furthermore, after Putin's decision to establish direct control over Chechnya at the beginning of June, the next steps are expected to be local elections.  The Russian Government does not intend to negotiate with Mashadov, who, according to reliable intelligence information, was involved in the terrorist activities of field commanders Shamil Basaev and Movladi Udugov. 

In a post-conflict rehabilitation effort Russian authorities have opened the first post-war branch of the Russian Central Bank.  It will provide support for the activity of the election commission in the republic.

2.  The Nagorno Karabakh Conflict

According to an opinion poll in Azerbaijan carried out by the Centre for Social-Economic Studies “Siar”, 66 per cent of the country's male population is ready to fight for the "liberation" of Nagorno Karabakh.  Eighty-eight per cent of those interviewed are worried about the present state of the negotiation process.  Most believe the ideal way to regulate the conflict is to continue negotiations with Armenia, with the help of foreign mediators.  Thirty-six per cent of the Azeri people believe Russia is the best international mediator, 19 per cent believe the US is, and 16 per cent see Turkey as the best mediator.

3.  The Abkhasian Conflict

 An unknown terrorist group in Abkhasia kidnapped four people on 1 June, including two Danish UN military observers and a British citizen working for a NGO.  They were freed on 6 June unconditionally.  The kidnappers' earlier demand had been US$300'000.  In the crisis-management operation Georgian President Eduard Shevardnadze spoke by phone with the leader of the self-proclaimed "Abkhasian republic", Vladislav Ardzindba, and this led to the successful release of those kidnapped.

The conflicting parties of the Abkhaz conflict cannot reach a comprehensive political settlement of the dispute.  Despite the unstable situation, however, the area remains generally calm.

4.  The Transdniestr Conflict

The National-Liberal Party of Moldova revitalised, at the beginning of April, an older suggestion of unification of Moldova with Romania.  This party has initiated a movement for that strives to become part of the “civilised world”, mainly of Romania.  This activity provoked a counter-proposal of the self-proclaimed Pridniestr republic, whose aim is to become part of the Union “Russia-Belarus”, in which it sees better prospects for development.

5.  Ecological Disaster in the Caspian Sea

Over 500 seals died at the end of April on the island of Shaliga, in the Kazakh part of the Caspian Sea.  The dead mammals were mainly two to three months old.  Experts say the seals were killed either by the mild, even warm winter or by hydrogen sulphide from the Tengiz oil sources and activities of other oil companies.  The eco-catastrophe will have adverse effects on the sea environment in the Azeri and Iranian parts of the Caspian Sea, and this could cause transborder tensions.

IV   The National Perspectives:  Specific Developments

1.  Armenia

At the end of April the parliamentary majority, subservient to the military-backed government of Prime Minister Aram Sarkisian, made an attempt to impeach President Robert Kocharian.  Observers interpreted this move as an indicator of the escalating power struggle between the government and its militaries, on one side, and the president, on the other.  Furthermore, this move was also an attempt to fix a definitely pro-Russian foreign political orientation.  The president reciprocated on 2 May by dismissing Sarkisian and Defence Minister Vagarshak Harutiunian only a few days after they concluded talks in Moscow on the transfer from Georgia to Armenia of Russian troops based in the Black Sea South Caucasian state.  These dismissals could lead to an improved relationship between Yerevan and Baku, including on the Nagorno Karabakh issue; it could also mean fewer chances for shifting the Russian armed contingents from Georgia to Armenia and an intensification of links with the US.

Andranik Markaryan, a 49-year-old computer expert and leader of the Republican Party, was appointed prime minister.  In the mid-1970s Markaryan was jailed for membership of an illegal nationalist party.

2.  Georgia

President Shevardnadze was easily re-elected on 9 April with more than 80 per cent of votes.  The opposition was not serious, but the Organisation for Security and Cooperation in Europe (OSCE) and the CE indicated irregularities in the conduct of the elections, including instances of ballot-stuffing, media bias and lack of transparency in vote counting and tabulation.  Building strong democratic institutions, fighting corruption and dealing with the four military bases in Georgia are the challenges ahead for the 72-year-old Shevardnadze.

3.  Moldova

Student riots in Chisinau from 17 to 20 April caused damage of US$100'000 and left 64 people injured, including 56 policemen.  Easter celebrations in the capital were cancelled.  The riots showed how weak the democratic institutions of Moldova still are: the police force is ill-trained and under-paid. They also showed how devastating excessive demands from international financial institutions can be in economies where the budgetary situation has already been disastrous.  The government’s main concern, however, remains how it can avoid defaulting on foreign debts.  On 17 April the parliament rejected the Privatisation Bill, proposed by the government, that resulted in the decision of the International Monetary Fund (IMF) not to disburse the next US$35 million instalment of a loan that was due to be paid mid-May.  The World Bank acted the same way on another loan.  New tensions can be expected if the economic pressure on the population persists.  The privatisation of the wine and tobacco industries remains the most contentious issue between Moldova and the IMF.  There is national resentment at a possible foreign take-over of these two industries.  There could be a political crisis similar to the one in  December last year when the new government of Dumitru Burghis was formed.

4.  Russia

Vladimir Putin was sworn into office as Russia’s president on 7 May.  His main tasks are coping with the Chechnya crisis and recovering Russia's status as a great power.  Putin was appointed by Russian President Michael Kassyanov, and his appointment was approved by the Duma with 325 votes in favour and 55 against, with 15 abstentions.  Putin issued a decree on 13 May to reform the Russian federal system:  seven federal districts were created as “hats” over the 89 regions.  Putin also announced that he was considering legislation to restrict the governors’ powers – a proposal likely to meet with fierce opposition in many regions.  The new federal order means regional capitals will be established in the seven districts, and it gives Putin the authority to set up staff in each capital.

Putin's first visit abroad was to the UK at the invitation of British Prime Minister Tony Blair.  On his way back to Moscow Putin briefly visited Belarus and the Ukraine, including the Black Sea Navy of Russia.  The Russian Senate ratified the START-2 Treaty on 19 April,  following the similar procedure of the Duma.

According to a new “foreign policy doctrine”, the Russian Foreign Ministry becomes directly responsible for coordinating all external government activity.  The doctrine is also expected to give a more central place to economic factors in policy-making.

5.  Ukraine

Ukrainians have voted overwhelmingly in favour of strengthening the power of the country’s president, Leonid Kuchma, at the expense of the parliament in a nation-wide referendum held on 16 April.  The amendment of the constitution, based on the referendum, is the president's next step.  Some observers interpret the referendum as another step towards dictatorship and a violation of the constitution; others consider it an internal Ukrainian matter.  In September 300 of the 450 members of parliament are expected to show the way of Ukrainian parliamentary democracy and decide to reduce their own power.  Kuchma says he needs more authority to implement economic reforms. 

The Ukrainian president announced at the beginning of June that the Chernobyl nuclear station would be closed by 15 December.

V   The Bilateral and Multilateral Relations in the Black Sea Basin

1.  Bilateral Relations

a)  Georgia-Armenia

Georgia's president met with Armenian President Robert Kocharian early April in Tbilisi.  Cooperation in international transport and energy programmes, and stability in the region, including improved Azerbaijan-Armenia relations with Georgian mediation, were points of agreement between the two.  Analysts say that beneath the tensions over Nagorno Karabakh there is a slow but steady growth of economic relations and trade between Armenia and Azerbaijan, interestingly via Georgia, and sometimes with the help of Iranian middle-men.  Armenian and other economic experts have started the discussion of developing a Caucasian common market of the three states.

b)  Romania-Moldova

A bilateral treaty was signed between the two countries on 28 April, constituting an important contribution to the stability of  the northeastern part of the Balkan peninsula and of the northwestern part of the Black Sea basin.

c)  Georgia-Russia

Russian Minister of the Interior Vladimir Rushailo visited Tbilisi on 26 May for two days.  He met with his counterpart and with the Russian president.  They agreed on the need to cooperate in fighting organised crime, money forgery and laundering, and the handling of dangerous criminals.  The director of the Russian federal border service, Konstantin Tozki, visited Georgia on 6 June and discussed bilateral cooperation and providing Georgia with border equipment.

d)  Azerbaijan-Russia

Tozki paid a similar visit to Azerbaijan on 5 June and agreed to intensify the individual efforts to overcome the problems facing the two border services.

e)  Bulgaria-Moldova

The Prime Minister of Moldova, Dumitru Burghis, visited Sofia on 22-23 June and met with Bulgarian Prime Minister Ivan Kostov and President Petar Stoyanov.  There are more than 90'000 Bulgarians living in Moldova.  Kostov agreed to provide the Bulgarian electric power transmission lines in Romania to keep the energy balance of Moldova.  Moldova agreed to continue the transit of nuclear waste from the Kozloduy nuclear plant to Russia.

2.  Multilateral Relations

a)  Meeting of Turkish-Speaking Countries

The leaders of Azerbaijan, Kazakhstan, Kyrgystan, Turkey, Turkmenistan and Uzbekistan met in Baku on 8 April.  They reached an agreement that stability in the region is dependent on the cooperation of the six countries in countering separatism, extremism, aggressive nationalism and international terrorism.

b)  The Commonwealth of Independent States (CIS)

The regular meeting of the Custom Union, comprising Russia, Belarus, Kazakhstan, Kyrgystan and Tajikistan, was convened in Minsk on 23 May.  The participants reached an agreement to continue to work towards forming a union similar to the Custom Union of the European Union (EU).  In September a working group is to present ideas for restructuring the present union.

The participating states in the Treaty for Collective Security met in Minsk on 24 May.  They confirmed the priority of their military-political relations relative to third-party  countries that are not part of the agreement.  A Committee of the Security Council of the Treaty was created for monitoring and reacting to ongoing global developments. The treaty remains open to other countries that share its principles.

Critics of the CIS in Baku point to the missing serious economic integration policy, and critics in Kiev underline Russian hegemonic ambitions.  Kuchma interpreted the meeting of the Custom Union as a Russian attempt to politically influence other CIS members.  During an economic forum in Moscow in mid-June, with participants from 60 countries, Russian Prime Minister Kassyanov declared Russia's ambition to create a single economic space on the territory of the CIS.

The CIS summit meeting was convened in Moscow on 20-21 June, and the topics of security and strategic stability dominated the discussions.  The CIS leaders agreed to create an anti-terrorist centre.  All CIS states but Turkmenistan will join in the activity of the centre, which will deal with information, organisation and administrative tasks to guarantee the fight against international terrorism and extremism.  The issue of creating a free trade zone of CIS countries was postponed.  In the context of the CIS, the leaders of Russia, Armenia, Azerbaijan and Georgia met on 20 June and decided to convene such meetings twice a year.

VI   State of the Regional Initiatives

1.  The Economic Situation in Individual Countries and in the Region

a)  Russia

The Russian economy grew by more than 7 per cent in the first three months of this year, the biggest jump in gross domestic product since Russia began measuring the figure in 1992.  This is a continuation of the same tendency in the previous year, when the economy grew by 3.2 per cent.  Rouble devaluation and higher oil prices helped the recovery.  The plans for 2000 are to continue to slow down inflation to between 11 and 12 per cent (compared to 90 per cent in 1999).  The economic aim of Putin's team is an annual economic growth of 5 to 10 per cent, an eventual liberalisation of the currency regime, and continuation of regular payments of the country’s foreign debt (US$3 billion were paid in the first quarter of this year).  IMF experts visited Russia in the second half of May in preparation of a new programme of cooperation that will be in line with the economic plans of the new government.  The new budget will function in the environment of a tax reform, where VAT is expected to be 13 per cent.  The new Russian budget is expected to be adopted before the summer parliamentary vacation.

b)  Turkey

The construction of two disputed power-plants in Adapazari and their future operation have received decisive financial support by the Export-Import Bank of the US.  It announced on 1 May that it would provide US$523 million to support the export of US equipment and services.  OPIC – the US Overseas Private Investment Corporation – will provide direct loans for the projects, and the official credit agencies of Germany and Belgium will provide comprehensive insurance.

According to OPIC vice-president Kirk Robertson, Turkey plays a pivotal role for OPIC in the region encompassing the Caspian Sea and the Black Sea nations, South-Eastern Europe and the eastern Mediterranean.  Turkey's market-friendly reforms have created a foundation for strong economic performance:  interest rates are down, private investment is up, and privatisation is being pursued aggressively.  Turkey, very probably, is moving into a period of sustained economic growth.

c)  Ukraine

Viktor Yushchenko, the Prime Minister of the Ukraine, started a visit on 9 May in the US in an effort to mend his country’s good name.  He met US President Bill Clinton, Clinton's national security adviser, Samuel Burger, US Secretary of State Madeleine Albright and the new head of the IMF, Horst Köhler.  There has been evidence that the Ukraine misled the IMF over foreign currency reserve levels in 1997-98, when Yushchenko was head of the country’s central bank.  An auditor’s study, made public at the beginning of May, showed that reserves were overstated by more than US$700 million, encouraging the IMF to lend US$200 million that it otherwise would not have.  Yushckenko's mission  was to revive a US$2.2 billion loan programme with the IMF. 

The US pressed the Ukrainian prime minister to close the Chernobyl nuclear plant and to tighten rules on the continuing production of pirate compact discs in the Ukraine.

d)  Multilateral Cooperation of OBSEC Countries

Bulgaria joined a project on 6 April that includes Greece, Cyprus, Russia and the Ukraine. The project aims to link telecommunication systems of these countries with an optic cable under the Black Sea.  The Greek OTE, the national telecommunication company, has a 37 per cent share in the project, the BTK, the Bulgarian partner, has 23 per cent, and three other companies hold the other 40 per cent.  Varna, Odessa and Novorossiysk are the Black Sea “pillars” of the project, which will be implemented by “Alcatel” and “Tico”.

2.  Political and Security Aspects of the Black Sea Basin Regional Cooperation

a)  A “Stability Pact”/Collective Security System Project

A few days before the presidential elections in Georgia, in a speech to the parliament in Tbilisi, Armenian President Kocherian said the membership of the three countries of the Southern Caucasus in the OSCE, the membership of Georgia in the CE and the upcoming memberships of Armenia and Azerbaijan in the same organisation preclude the philosophic  debate about the three states “belonging” to Europe.  The weakest but key component of cooperation in the region is the lack of a collective security system.  The formula of Armenia is 3+3+2: the three states of the Southern Caucasus, their three immediate neighbours Russia, Turkey and Iran, and the EU and the US.  Kocharian underlined the role of the various historic, economic, cultural and other links of the three countries with Russia.  At the beginning of May the Brussels-based think-tank CEPS – the Centre for European Policy Studies – announced the draft of a “stability pact” for the conflict-torn Caucasus region.  Its authors consider the time ripe for its launch because of the deadlocked conflicts and war fatigue.  CEPS envisages a cooperative regime for the south and north Caucasus regions that would be underwritten by all regional actors and big external powers.  The EU, the US and Russia would sketch out a “stability pact” for the area, a call for which was made in January this year by the then Turkish President Suleyman Demirel.  A South Caucasus Community (SCC) is expected to be established.  The OSCE is considered by CEPS to be the most appropriate international body to oversee the system, which would cover the Black Sea, the Caucasus and the Caspian Sea regions.

b)  Black Sea Navy Cooperation

The third meeting of representatives of the navies of the Black Sea countries was convened in Istanbul on 17 April.  Cooperation in rescue and humanitarian contingencies is the target of this cooperation.

c)  PfP Cooperation

The Partnership for Peace (PfP) navy exercise “Cooperative Partner – 2000” started on 19 June near Odessa, a Black Sea port in the Ukraine. The exercise will last till 1 July.  It will deal with peacekeeping and rescue situations.  Bulgaria joined the exercise with three navy ships.  Other PfP participants are Azerbaijan, Georgia, Romania, Sweden and the Ukraine.  Russia is not participating but is monitoring the exercise without observers.  The reasons are said to be economic.  NATO states that participants in the exercise are:  the UK, Belgium, Greece, Italy, Spain, France, Germany, the Netherlands, Turkey and the US.

VII   External Factors (States and Institutions) Influencing the Black Sea Region

1.  US

(1)  US-Azerbaijan.  At the beginning of April the US State Department disclosed its concern about the continuing detention of 50 political prisoners in Azerbaijan.    (2)  US-Ukraine.  Madeleine Albright met in Kiev with her Ukrainian counterpart Boris Tarasyuk on 14 April.  She also met the president and the prime minister of the Ukraine.  The visit was in confirmation of the strategic partnership between the two countries. US President Bill Clinton made a short visit to the Ukraine on 5 June, met with the president and gave a speech at a big gathering  in St. Michael’s Square in Kiev.  The decision to close the Chernobyl nuclear plant by 15 December was applauded by the US, and US$78 million will be added to the Chernobyl Shelter Fund, which is to pay for a sarcophagus of the Chernobyl reactors.  The US will also help the Ukraine diversify its sources of nuclear fuel and thereby cut its energy costs. Clinton also announced that commercial space-launch quotas with the Ukraine are being eliminated, opening the way for more commercial ventures.  Cooperation in other areas was also agreed upon.  (3)  US-Turkey. The US Assistant Secretary of State for Near Eastern Affairs, Ed Walker, visited Turkey on 13-14 April and had talks at the Ministry of Foreign Affairs in Ankara.  The US Ambassador to Turkey, Marc Parris, spoke on June 1 at the Southeastern Anatolian Industrialists and Businessmen’s Association Forum in Sirnak, Turkey. He spoke on the opportunities for US business investment and trade in the region.  This was the first visit of a US ambassador to the southeastern region in 20 years.  It is a powerful indicator of an improved security situation. Parris addressed the Batman Bar Association on 2 June and expressed his government’s support for peace and the rights of the citizens guaranteed them under the law.  (4)  US-Russia. Clinton visited Moscow on 4-5 June, held talks on the economic reform in Russia, spoke to the Russian Duma – the first time  an American president has done so – and agreed with Putin to launch a joint warning centre on missile launches. A bilateral meeting between US Secretary of Defence William Cohen and Russian Minister of Defence Igor Sergeyev was held on 9 June in Brussels.  They discussed the development of a missile defence system.  It was suggested that the US, Russia and European countries may work together to meet common security needs through common defence. Cohen said after the meeting that the Russians had given no details about their proposal. Cohen discussed the same ideas further in Moscow on 12-13 June with his Russian counterpart and with Putin.  (5)  US-Georgia. A mass casualty exercise by US and Georgian forces was carried out on 14-25 June in the Caucasus. It was the first of its kind in the spirit of PfP in Georgia.  (6)  US-Armenia. Clinton met Armenian President Robert Kocharian on 27 June in the White House.  They discussed regional issues, including the US support for the Nagorno Karabakh peace process and the restoration of the economic ties between the countries of the Caucasus.  Armenia’s efforts to strengthen democracy and the rule of law and to build a market economy were also discussed.

2.  NATO

(1)  NATO-Georgia.  A few days before the presidential elections in Georgia, President Shevardnadze told reporters that Georgia would knock on the doors of NATO in 2005, but the knocking would probably continue for ten years.  (2)  NATO-Ukraine.  The NATO-Ukraine Commission for Distinctive Partnership held a meeting at the Foreign Ministers' level on 25 May in Florence, Italy, and at the Defence Ministers’ level on 8 June in Brussels. A shift from making plans and pledges to carrying out commitments was considered the conclusion of these meetings.  (3)  NATO-Russia. General Anatoly Kvashnin, Russian Chief of General Staff, visited NATO HQ in Brussels on 7 May and attended the meeting of the NATO-Russia Permanent Joint Council at the level of Chiefs of General Staff.  Russian Foreign Minister Igor Ivanov attended the meeting of the Joint Council at Foreign Ministers' level on 25 May in Florence.  Russian Defence Minister Sergeyev attended the meeting of the Permanent Joint Council at the Defence Ministers' level in Brussels on 9 June.

3.  EU

EU High Representative for Common Foreign and Security Policy (CFSP) Javier Solana, EC President Romano Prodi and other EU representatives visited Moscow on 29 May and participated in a Russia-EU meeting.  They met with Putin. The EU Council summit in Feira, Portugal, on 20-21 June confirmed the will of the EU to support the efforts of Putin and the Russian Government to modernise and reform the country.

VIII   The Security Situation and the Region-Building Opportunities:  Conclusions

1.  Post-conflict Chechnya remains in the grips of the separatists’ acts of terror and occasional fierce fighting in some areas.  Russia’s post-war rehabilitation efforts are part of a broader domestic, economic, strategic and foreign-political activism that is expected to revive the great power status of the country under a new and dynamic president.  A visit by US President Bill Clinton to Moscow and Kiev intensified NATO-Russia and NATO-Ukraine contacts and lead to a new stability for ongoing issues in the Black Sea/Transcaucasus/Caspian Sea region.  Bottom-up initiatives and ideas could shape a more stable regional configuration of security relations.  NATO's Partnership for Peace program is one of the positive agents in the Black Sea and the Caucasus, stimulating partnership and cooperation.

2. Oil and gas projects moved in a generally constructive way, seeking compromise and opportunity for more actors. The US and the EU are acting in a constructive way that could provide chances for a stable and longer-term economic cooperation.  There are indications that the South-Eastern Europe region is taking shape, despite slowly evolving cooperation Transcaucasian region, which has the potential for beneficial relations between all players.